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Jim Wyckoff's Morning Report: Markets Firmer Overnight

06 January 2014
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - For many traders and investors, this is their first day back at work after a long holiday break.

Later this week the headline risk picks up, as the Federal Reserve’s FOMC minutes are out Wednesday afternoon, while the European Central Bank holds its monthly meeting on Thursday and the U.S. employment report is out on Friday.

There is also important economic data coming out of China later this week, including trade and inflation reports. Last week, a disappointing purchasing managers index in China was reported, which has helped to sink the Chinese stock market the past few sessions.

The spike in short-term Chinese interest rates in late December is still on traders’ minds. China remains an increasingly important cog in the collective world economy.

U.S. economic data due for release Monday includes manufacturers’ shipments and orders, the ISM non-manufacturing report, and the global services purchasing managers index.

Wyckoff’s Daily Risk Rating: 5.0 (No major headline risk today, but the heat will be turned up as the week progresses.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

--Jim

U.S. STOCK INDEXES

S&P 500 futures: Prices are slightly higher in early U.S. trading. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today.

Today, shorter-term technical resistance comes in at Friday’s high of 1,832.50 and then at 1,840.50. Buy stops likely reside just above those levels. Downside support for active traders today is located at Friday’s low of 1,821.00 and then at 1,810.00. Sell stops are likely located just below those levels. Wyckoff's Intra-day Market Rating: 5.5

Nasdaq index futures: Prices are slightly higher early today. The shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day.

Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Shorter-term technical resistance is located at the overnight high of 3,540.25 and then at 3,550.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 3,527.00 and then at 3,500.00. Sell stops are likely located just below those levels. Wyckoff's Intra-Day Market Rating: 5.5.

Dow futures: Prices are slightly higher early today. Buy stops likely reside just above technical resistance at Friday’s high of 16,450 and then at 16,500. Sell stops likely reside just below technical support at 16,400 and then at Friday’s low of 16,375.

Shorter-term moving averages are still bullish early today, as the 4-day moving average is above the 9-day and 18-day. The 9-day moving average is above the 18-day moving average. Shorter-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Wyckoff's Intra-Day Market Rating: 5.5

U.S. TREASURY BONDS AND NOTES

March U.S. T-Bonds: Prices are firmer early today on short covering in a bear market. The bears still have the solid overall near-term technical advantage as prices are in a nine-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are bearish early today.

The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at the overnight high of 128 26/32 and then at 129 even. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 128 8/32 and then at 128 1/32. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.5

March U.S. T-Notes: Prices are slightly higher early today and hovering near the recent 3.5-month low. Prices are in a nine-week-old downtrend on the daily bar chart. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average.

Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at last week’s high of 123.12.5 and then at 123.17.5. Buy stops likely reside just above those levels. Shorter-term technical support lies at the overnight low of 122.30.0 and then at the December low of 122.24.5. Sell stops likely reside just below those levels. Wyckoff's Intra-Day Market Rating: 5.0

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly higher early today and hit a four-week high overnight. The greenback bulls have gained upside momentum. Slow stochastics for the dollar index are bullish early today.

The dollar index finds shorter-term technical resistance at the overnight high of 81.080 and then at the December high of 80.185. Shorter-term support is seen at the overnight low of 80.880 and then at Friday’s low of 80.640. Wyckoff's Intra Day Market Rating: 5.5

NYMEX CRUDE OIL

February Nymex crude oil prices are firmer early today and seeing a corrective bounce after dropping sharply and hitting a four-week low on Friday. Bears have regained the overall near-term technical advantage.

In February Nymex crude, look for buy stops to reside just above resistance at the overnight high of $94.59 and then at $95.00. Look for sell stops just below technical support at $94.00 and then at last week’s low of $93.86. Wyckoff's Intra-Day Market Rating: 5.5

GRAINS

Markets were firmer overnight on a short covering bounce following recent selling pressure. Technically, corn and wheat futures bears are still in full control with prices not far above their recent contract lows. Soybean bulls have faded badly recently, too. Corn and soybean traders will continue to keep an eye on South American weather, which so far has not been significantly worrisome for the crops.

An arctic blast in the U.S. does have some wheat growers worried about winter kill, and that will limit selling pressure in the wheat futures markets. Traders will closely examine Monday morning’s weekly USDA grain export inspections data.

TheCropSite News Desk

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.



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